Aligned Energy's CEO Andrew Schaap on What it Takes to Operate a Northern Virginia Data Center

01/08/2020

INTERVIEW - HAWKTALK 31

This is What It Takes to Operate a Northern Virginia Data Center


We recently sat down with Andrew Schaap, CEO of Aligned Energy and Mike Coleman, Aligned’s Global Head of Design and Delivery to get their perspective on operating data centers in Northern Virginia. We talked about recent changes in customer needs and how they move quickly to meet those needs in the hottest colocation market on earth.

This is episode 31 of HawkTalk, datacenterHawk’s discussion series with industry executives. If you enjoy the conversation and don’t want to miss the rest of the series, just hit subscribe on iTunes, stream it on Spotify, or follow us on YouTube.


AUDIO TRANSCRIPT

David Liggitt: I'm David Liggitt, with datacenterHawk and this is HawkTalk 31. I'm sitting in Ashburn, Virginia with Andrew Schaap, CEO of Aligned Energy and Mike Coleman global head of design and delivery. Gentlemen, thank you for hosting us. We're really excited to be here.

Andrew Schaap: Thank you David. Thanks for coming out.

ALIGNED ENERGY’S NEW NORTHERN VIRGINIA DATA CENTER

David Liggitt: You bet. So Andrew I want to start with just this facility and the fact that you've recently opened the site. When you think about Northern Virginia, the largest data center market in the world, over 1100 megawatts of multi-tenant commissioned power. And one thing that I think has been interesting about this market is watching the way it's grown.

Obviously there's a lot happening in Ashburn, but we've seen growth in Leesburg, we've seen growth South to Manassas, but you all chose to be right here in the middle of the main and main of the data center industry. Talk about just how important it is to be right here in Ashburn.

Andrew Schaap: Yeah, thank you David. We're delighted with the site.

Obviously we're sitting right in the middle of core Ashburn between Waxpool and Loudoun County Parkway. Obviously the network connectivity here is fantastic cause all the big networks run just North and South of us.

The site, a lot of people didn't realize the site existed and drove by a hundred times and didn't see it. Informally, I've been out here a lot running other parts of the business but just couldn't be happier with the site. The site commissioning is this week, which thanks for coming out.

The building is roughly 400,000 square feet in this particular site. And then we've got another parcel next door to us, which will be able to get this campus up over a million square feet end state.

David Liggitt: Yeah, well it's exciting. And I think I was out here actually a month ago. We walked the campus and one of the interesting things was, like I said, just right in the middle of where everything is happening in Northern Virginia, which is really impressive.

CHANGES IN DATA CENTER DELIVERY OVER THE PAST 5 YEARS

David Liggitt: And Mike, given your background in the space one of the things that we've seen over the last five years has been a change in the way data centers are being delivered and built to the market. How have you seen that change from where we were maybe back in 2014, 2015 to where we are today?

The need to service hyperscale and enterprise colocation in the same building

Mike Coleman: So I think the site here in Virginia is a great example of how Aligned's infrastructure and portfolio has evolved to meet the needs of the market.

This is clearly much more of a building that mimics, say, the hyperscale community space and size. But it also incorporates our adaptability and our ability to handle each deal being very unique.

So whether it's an enterprise customer or hyperscale customer we've been able to incorporate our incremental deployment of cooling and electrical capacity into a much larger building to meet the customer needs here in Loudoun County.

Sustainability becoming more important

Andrew Schaap: And one thing that I think maybe we should touch on is, 10 years ago there were sustainability people that might've been in the room during a data center selection, things like that. Five years ago, they definitely were in the room and they had more of a voice. Today they are very influential on who they choose and why they choose certain providers.

So again, part of the VSAS, the last S is sustainability. That incremental approach that Mike talked about, that incremental approach is also about deploying less gear on the front end. We have no waste on square footage or infrastructure. We're perfectly matching or aligning with what clients’ goals are. And that's something that we're doing very well.

The rise of incremental deployments as a means to flexibility

And I think it's something that again, when everybody's building very standard products and other clients are after something that might be a little bit different from one space to another space. Our infrastructure enables us to kind of adapt to what the clients are after.

Mike Coleman: Yeah. So when you initially deploy and you make a commitment for 5 or 10 megawatts and you're slowly ramping up, most data centers commit that cooling and electrical infrastructure for that total space.

We're enabled to deploy that incrementally as the load increases, which allows the PUE's to stay perfect from day one, from date of deployment, and allows us to scale so that we're not stranding cooling and we were not operating inefficiently.

David Liggitt: Yeah. And it's certainly one of the trends we've seen in the data center space in the last three to five years is data center end users really valuing the ability to have some flexibility in not only the way they grow from an infrastructure side of things, but also how that flexibility hits their business, Andrew, which you mentioned.

END USERS WANT VELOCITY, SCALABILITY, ADAPTABILITY, AND SUSTAINABILITY (VSAS)

David Liggitt: One of the things that you all have done in the last year is you've termed VSAS as something that you are rolling out to your customers in a way that differentiates what Aligned is doing from others. Talk about that acronym what it means to you all and what it means to your customers.

Andrew Schaap: So VSAS is a brilliant idea that all of our customers say to us, they may not use those exact terms, but they absolutely say those words to us. And we coined it.

Essentially it stands for velocity, scalability, adaptability and sustainability. That's the acronym. And again, our customers are telling us that's what's important to them.

We've then turned that into that moniker that we use all throughout our buildings and on our tee shirts and on our hard hats and all that kind of all those different marketing mediums.

But again, the customers are saying, “Hey, we need this kind of flexibility in our provider”. And so the technology helps us on one side. But then obviously, Mike and some of his experience in the side of the hyperscale space as well as his experience on the electrical side. We're being more creative and nimble about how we deliver infrastructure to the clients.

So we're able to go, “This client can be a low density, this client can be a high density” and we don't have to strand any infrastructure or square footage in our facility. And that's the big takeaway that when folks walk through these facilities and they see the efficiency that again, “I don't have to burden my shareholders with that burden” or “I don't have to burden a client in the form of some type of rent or some type of guaranteed option in their contract”.

They can just come to us and scale at will.

THE IMPORTANCE OF HIGH VELOCITY DATA CENTER DELIVERY

David Liggitt: Yeah, and Mike, from your background and your time spent on the user side of the market, talk about speed to market and how important that is today. I mean velocity is for the V but, but talk about why that's so important.

Mike Coleman: Well the actual growth and the scalability of the business, right?

Business needs and requirements change over time

Mike Coleman: So what I struggled with prior to coming to Aligned when I was procuring space or securing it for a 10 year or 15 year period; it takes a while to fill the space. Over a couple-of-year period, the technology that we have deployed changes rapidly.

I think everybody understands the three to five year tech refresh. And as that moves forward, the power utilization moves up. Cooling requirements change, business needs change, your computer requirements change.

High velocity means customers don’t need to commit to too much on day one

Mike Coleman: The great thing about our product is, it is incredibly versatile. The speed to market makes a huge difference because, if we need to deploy quickly, the design is deployable in small increments or large increments very quickly because we have a rolling 50 megawatt worth of cooling and electrical equipment at any one time and we can deploy 2 to 12 megawatts in up to 90-120 days.

So the customers don't need to commit day one to any one size in their space and they don't need to commit to a density because we can adapt relatively quickly, quicker than anything I've ever seen in the market. And adapt to the changes with their business. And that I find giving them the ability to be flexible, making a decision that might lock them in for a long period of time, but allow the business to actually flex and change up. Sometimes, an assigned partner, individual business, has one business unit in and when they've signed the lease and somebody else moves in and the densities are very different.

We can adapt to that without any problem whatsoever.

Committing to suppliers early lets Aligned say yes to transactions quickly while also giving suppliers a more predictable forecast

Andrew Schaap: The only thing I'd add, and I think Mike hit it, but I want to kind of maybe underscore this is, thanks to our shareholders and our board who are very thoughtful about the industry and long range planning. Because what this enabled us to do is essentially turn the supply chain on its head.

The way traditional supply chain works is you get a contract, then you go execute with your suppliers whether it's gen's, UPS's, infrastructure.

What we've done is we believe so strongly in what we're doing and so does our board that we've essentially said to our suppliers, we've just turned that around and said, “Look, we're going to commit to you and we have committed to you”.

And they're very pleased with that because that flattens out their supply chain also. They understand what's coming, they understand the orders, they can properly staff inside of their factories where they're building things.

And then all the suppliers have the same challenge, which is they're trying to make wall street happy. They're trying to hit expectations of what's coming and we're able to very easily predict to them, here's what's coming, here's how we're delivering KW. And then here's the orders that will come from us in the next 12 months.

So that 50 megawatts of rolling inventory that we have really enables Mike and his team to kind of pick and choose very quickly where we can say yes to transactions and opportunities and deploy that infrastructure and just ship it wherever it happens to go.

DELTA CUBE: ALIGNED’S NEW PATENTED COOLING TECHNOLOGY

David Liggitt: Absolutely. So one of the other things that I think about when I started back in the space in the 2007 time period was just the way the facilities from an electrical mechanical side of things were built then and the way they're built today, which you all have hit upon some of those.

But, if you tour through an Aligned facility, one of the things you'll see is what's behind me, which is this Delta Cube technology that you all have delivered. We spent some time talking about the last time we were together. And it's a differentiator.

Future proofing

It's something that adds true value to not just efficiency, but scalability and the future proofing that you were talking about earlier. Speak to that and why that was an important thing for you all to focus on and deliver for your clients.

Andrew Schaap: Yeah, and maybe I'll start on the business side. So behind us is some of the technology that enables us to be flexible on how we deliver. It's 45 patents in about 450 dependent claims that sit underneath those patents. We've got a great partner that manufactures these for us both in the States as well as internationally. So 50 Hertz or 60 Hertz can translate really easily.

Reducing uncertainty for CIOs and CTOs who are planning their IT infrastructure

The nice thing about the technology also, whether it's brownfield or greenfield, if you notice, it's very modular and it deploys without having any impact to the client. So you'll see the marketing that we've got behind us and we call them essentially blanking panels or expansions slots.

So this is designed in this data hall for 350, 450 Watts per square foot. But as the customer scales in 3, 5, 10 years, it'd be really easy to deliver up the next Delta 3 array to continue to reject more and more heat in the same footprint. So we're, most people are doing what I'd call a scale-out. If you need more kW, take another footprint, take another pod.

We've got the ability to scale in place where we can actually scale and densify them in the same footprint, which again removes a lot of uncertainty to the CIO or CTO as they're trying to future plan their IT infrastructure as no one really has a perfect crystal ball in 3, 5, 6 years from now.

David Liggitt: It's hard to make a decision with the unknown. And I think this gives companies the ability to know that they have the options moving forward to scale up or down based on what you all are doing.

Mike Coleman: And along with the scalability and the incremental deployment of the fan arrays or the fan wall that couples with the cactus chiller, which is also an Aligned proprietary piece of cooling equipment. It gives us the ability to scale the chilled water and the chiller plant equally with the fan wall. So we're not over-deploying chilled water capacity or chillers in the yard as well so they both work together.

Aligning with customer goals

Andrew Schaap: When we walk through the building, you'll see some of the branding that our marketing team has done where we're using the Aligned name and really what the Aligned name is it's aligned with customer's goals, their objectives, whether those are densification, whether it's sustainability, whether it's scale, whether it's velocity.

And so you'll see that moniker around too where it's “Aligned With the Client” and that enables us to, really on the backside we're aligning the capital that we deploy with what the client's requirements are. So if day one they want X, we're able to deliver X and in 3, 4 or 5 years, if they need to densify or change up their technology, we can essentially align with their goals.

ADDRESSING MATURING CONNECTIVITY NEEDS

David Liggitt: You bet. And actually, I think that's a change that took place probably 3, 4, or 5 years ago where if you think back to the space 10 years ago, the data center operator built the same way every time and really focused on that.

And then there was a shift in thinking on, “Hey, now we're going to take the money that we have, listen to what the customer needs and do our best to meet their needs and be as flexible within reason as we can to help do that”. And I think it's one of the reasons that in the last 3 to 5 years you've seen the market grow so much is the solutions that you all and other data center operators are delivering to those customers.

One of the things that we've seen users want more of is a more mature connectivity offering, not just from data center operators themselves, but from, opportunities to connect into different cloud platforms, et cetera.

Just talk about that from a user standpoint, what you all are hearing from the market. Why is that so important for data center users today? From a connectivity standpoint, how are you all delivering a facility and platform that meets those needs?

Making cross connects free to users

Andrew Schaap: So first and foremost, no cross connects, no cross connect fees, none of that recurring expense for our clients.

David Liggitt: Which is a big deal.

Andrew Schaap: It is. I mean if you look at it just on the surface, it doesn't make sense to do that from a business perspective for the way that our clients deploy.

Diversity in the number of carrier access points

Andrew Schaap: And then the next thing is we have a team that's dedicated to work directly with the carriers. Obviously having great relationships with all the big carriers, the carriers to the carriers, the folks that are delivering dark fiber or lit fiber. In each of our facilities we really try hard to make sure that there is complete diversity.

So this particular site that we're in, we actually have four access points into the facility because we're seeing more and more clients asking for not two access points, maybe three access points. And so again, we're trying to future proof by saying, look, we're going to have four access points into the facility. They may not all be lit day one, but if a client has that requirement, we can really quickly adapt.

And then obviously everyone's trying to get some type of on-ramp solution. We've got an on-ramp solution that we'll be doing a press release on in the near future. And that covers all of our sites, that again enables our clients to jump on very, very easily.

Reducing latency for hybrid stacks

Mike Coleman: I would say proximity to their partners in the market, right? So latency is a big deal.

Hybrid IT stacks are becoming more prevalent. I know that there is a lot of talk about people going directly to the cloud. Reality is, what I've seen in the past is, they can get 90% there, but they're still tied back to their internal stack.

So proximity to their partners, multiple cloud partners, most of them aren't picking one. So diversity in and, and having that flexibility to connect and then grow in a hybrid environment is pretty important.

WHY NORTHERN VIRGINIA HAS BECOME A LARGE STRATEGIC MARKET

David Liggitt: Yeah, that's great. I want to go back to just at the beginning, we talked about Northern Virginia. We talked about this market and how different, every data center market is different, but this one has some very unique characteristics.

You all being data center industry veterans for a long time, and that's a compliment, but talk about why Northern Virginia has become such a large and strategic data center market and what are some of those factors? And I'd love both y’alls opinion on this. Why do you think it's become the way it has?

The network effect: as more people move in, more want to be there

Andrew Schaap: Yeah, I'll start. So the network effect is a real thing.

As more folks come into the market, more have to be close. And they want to be proximate, not only to their cloud provider, but also, if they have backend applications that happen to land in a facility like ours. But also with our SaaS provider because we kind of see that there is pushing that load into different different end solutions, whether it's a SaaS provider, cloud provider, or traditional data center operator like us.

That network effect of everybody coming to Ashburn, Virginia, the network that's already in the ground in Ashburn, Virginia creates a dynamic where people still have to be here in one form or fashion or really want to be here for some type of load. So it was something that I wanted to do as soon as I came on, land in Northern Virginia.

So I would say all the statistics on Northern Virginia, everybody has them and knows them. It's the fastest growing. Last year it dwarfed other markets. And it continues to grow at a pretty good clip. We believe that, even with all the competitors here, we've got a pretty good solution. And the differentiators that we've put forward clients are responding to.

Proximity to high speed transactional exchanges and analytics

Mike Coleman: Yeah. So that network effect is key. High-speed transactional ad exchange, big query; that stuff is being more and more sourced externally but tied into your system. So access to data analytics in real time is driving more and more traffic in the area, more need for space. And, like I said, financial transactions, the ad exchange, and peering is a big attraction to the market as well.

Great pool of technical, data center talent

Andrew Schaap: Simple things like there's a lot of technical talent here. There's a lot of human beings that know what they're doing in this market. So if you think about one client who may already be in this market, it's very easy to continue to expand and grow because they've already got, staff, people, things like that in the market. And whether it's Dominion Energy or, North Virginia, they're doing it right. They're aware of the competitive differentiators for Virginia and they're continuing to be nimble and thoughtful and flexible with providers like us.

ALIGNED’S PLANS FOR FUTURE GROWTH

David Liggitt: So the last several years for Aligned has been fast and furious.

Andrew Schaap: Noo, no, it hasn't!

David Liggitt: I mean, y'all have taken the Dallas data facility. You're now in Phoenix. You're in Salt Lake City, you're here in Northern Virginia. I mean, what do the next several years look like? Just as you all think about the industry and how you're positioning aligned on the road. What do you get excited about?

Andrew Schaap: I can't tell you any of that. It's all top secret.

Continued expansion without slowing down, fueled by great capital partners

Andrew Schaap: Look, we're delighted with our capital partners. The capital partners on the equity side are very thoughtful. They believe in the industry. We really spend a lot of time talking to them about what's happening in the industry, looking at different markets. So you're not going to see us slow down anytime soon.

On the debt side, we've got a great relationship with Goldman Sachs. You'll see a press release on an upsize in our debt shortly. They've just been a great partner on that side. So you're not going to see us slow down. If anything, guys like Mike and Billy who came to run operations for us, we're really pulling in some real veterans into this into this business and the goal is to grow fast and furious.

Moving into international markets

Andrew Schaap: International doesn't scare us at all. I've seen folks go international and it's challenging sometimes. We've set up our supply chain, we've brought on great talent that can go international and has experience. Mike's got plenty of stamps in his passport. He knows how to get there, so we're, we're not afraid of that. So you'll see us get into international markets in the future as well.

David Liggitt: Well, that's awesome. I want to thank you both, Andrew, and Mike for letting us be here, for touring us through the facility and just sharing your ideas about the industry and I look forward to the next time we get to catch up.

Andrew Schaap: Thanks for coming out.

Mike Coleman: Appreciate it.


This is episode 31 of HawkTalk, datacenterHawk’s discussion series with industry executives. If you enjoy the conversation and don’t want to miss the rest of the series, just hit subscribe on iTunes, stream it on Spotify, or follow us on YouTube.

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